Seattle is to coffee as Alaska is to snow and New York is to bagels.
In Seattle, you could find a coffee shop almost every corner of the road. Yet, Starbucks makes a difference.
Whether it’s a rainy day or a sunny day, a weekday or a weekend, the original Starbucks is always, always crowded. Picture below is a typical day at the original Starbucks at Pike Place Market, Seattle. No matter how many coffee shops we have here, Seattle’s visitors still go there, take photos, and enjoy being in the original Starbucks. So it seems that Starbucks is not just about coffee after all.
From a small coffee shop founded in 1971, Starbucks Coffee Company has grown into the largest coffeehouse company in the world with more than 17,000 stores in 55 countries worldwide1. Starbucks holds about one third of the market share for coffee in the US. The company’s primary target audience are men and women aged 25 to 40. They account for almost half of its total business. The secondary target audience are young adults, which account for about 40% of Starbucks’ sales.
Starbucks have their own coffee farms and harvesters, their own roaster, and recipes. The company sells not only coffee, but also hot and cold drinks, coffee beans, salads, sandwiches, snacks, and items like mugs, t-shirts, and tumblers. Starbucks also sells a wide range of products in grocery stores such as bottled Starbucks drinks, Tazo teas, Starbucks ice cream, and Starbucks energy plus coffee drinks. The company also has an entertainment line that sells books, music, and film.
What make Starbucks so successful? I don't think that products alone would do. Starbucks provides not just coffee. But Starbucks has created a “Starbucks lifestyle” that more people continue to embrace in the US and abroad. The primary key to Starbucks’ success is and has always been “people”. The company has set up a business model with core values emanating from and around relationships with people. It is the key that sets Starbucks apart from other companies today.
Starbucks coffee is not cheap. Price is one key factor that could greatly impact the company performance, especially during the economic downturn or when competition is heating up. During economic crisis and increased competition (e.g. when McDonald and Dunkin’s Donut entered the quality coffee market), Starbucks revenues fell significantly. Starbucks’ stock fell from around $40 per share in 2007 to less than $10 in late 2008.
Starbucks is able to contend with the enhanced competition by adjusting its marketing plan to showcase its premium quality and remind loyal customers of other competitive advantages. With a focus on strategic global expansion and providing customers with the “distinctive Starbucks experience”, the company is now able to find its way back to the top and its stock price rise more than three-fold the low point in 2008.
When asked what he saw in Starbucks, Howard Schultz, the company’s CEO said “I see a deep sense of community. We've intended, from day one, to really kind of build a third place between home and work. And really, I think at a time in America where people are hungry for human connection, we're providing that.”2
Starbucks has very effective marketing communications strategies, from consistent branding, creating online and web experience, to integrated communications across multiple channels such as social media, emails, etc. Starbucks website serves as the hub of experience where consumers can share ideas and feedback to the company. Starbucks's loyalty program and mobile app are also very successful. The mobile app creates value to customers by providing enjoyment/entertainment and chances to win a prize, while it increases sales since customers have incentive to buy more items to increase their chances of winning the prize. The in-store and product experince, the mobile and online activities, and the loyalty programs, all are linked together - creating great human connection and making Starbucks different.
Good lessons to learn from Starbuck: http://www.powerhomebiz.com/vol144/starbucks.htm
Good lessons to learn from Starbuck: http://www.powerhomebiz.com/vol144/starbucks.htm
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